Homework 2 - Economics 1480 Homework #2 1) Rosen Chapter 4:...

Economics 1480 Homework #2 1) Rosen Chapter 4: problem 11 2) Rosen Chapter 4: problem 13 3) Read the article “Why Budget Cuts for Public TV Roil Some Voters”, which can be found on Lexis-Nexis Academic (Christian Science Monitor, January 19, 1995). a) Do you consider radio to be a public good? Why or why not? b) Using the crowd-out model developed in class, comment on the following passage: “If the tax money spigot were turned off, it wouldn’t be the end of Barney or Washington Week, they say. Foundations, individuals, and corporate donations would make up the slack. ‘They would go out in the marketplace and they’d do fine,’ said Speaker Gingrich on Jan. 17.” 4) Consider a simple version of the model of continuous public goods with two individuals that I presented in class. Each individual has an income of $30 and preferences over a public good (G) and a private good (individual 1 consumes z 1 and individual two consumes z 2 ). Prices of both the private and public goods (c) equal $1. Assume that individuals have equally-weighted Cobb-Douglas preferences

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